Buy now, pay later is now mainstream in the United States as banks adopt it, fintechs scale it and credit bureaus start tracking it — fueled by younger users, e-commerce growth and changing credit norms.

The buy now, pay later (BNPL) U.S. market is projected to be worth $122.3 billion in 2025 and reach $184.1 billion by 2030, driven by competition between financial institutions and fintechs, according to Research and Markets‘ “United States Buy Now Pay Later Market Report 2025” report released in February.

In fact, nearly 60% of all music festival tickets for Coachella 2025 were financed through BNPL, according to music magazine Billboard.

BNPL may be booming in North America in 2025, but it isn’t new, Andreas Mjelde, co-founder and chief executive of Oslo-based B2B payments company Two, told Bank Automation News.

The concept originated thousands of years ago, when the ancient Sumerians used IOUs for invoices between marketplace traders and producers of goods such as farmers, he said.

Founded in 2020, Two provides BNPL solutions for financial institutions, including:

• Allianz Trade, subsidiary of the $1.7 trillion insurance giant Allianz;
• $400.7 billion ABN AMRO; and
• $102.7 billion Santander.

Modern BNPL service isn’t quite as established, although it’s been used in Europe for decades, Mjelde said.

“On this side of the pond, it’s been an industry offering for 20 years,” he said, referring to when Swedish BNPL fintech Klarna launched its first service. The European BNPL market is expected to reach $191.3 billion this year and hit $293.7 billion by 2030, according to a separate Research and Markets report published on Feb. 28

“The remarkable part about it is that [BNPL] continues to grow. It’s been on a 20-year growth journey, and I don’t think we’ve really seen the end of it either.”

— Andreas Mjelde, co-founder and CEO, Two

Klarna filed for an initial public offering in March that valued it at $15 billion. The IPO was postponed by the fintech this month, citing tariff-fueled market volatility.

Whether Klarna will resume its IPO plans is yet to be determined, but April has brought greater levels of uncertainty than usual in an already unpredictable IPO market, Gunnar Millier, advisory senior manager for mergers, acquisitions and divestitures at consulting firm Deloitte, told BAN recently.

Despite its ancient origins, adoption of B2B BNPL is about a decade behind consumer BNPL. However, it is growing rapidly, with double- or triple-digit annual growth expected to continue with the integration of AI and machine learning in the lending space, Two’s Mjelde said.

BNPL’s U.S. takeoff

The rapid rise of BNPL in the U.S. is being driven by evolving consumer behavior and digital commerce trends, Pranati Dave, practice director at consultancy Everest Group, told BAN.

Key factors include:

• Demand from younger consumers for flexible, transparent payment options;
• A shift away from traditional credit;
• E-commerce growth, creating more BNPL opportunities;
• Easy checkout integration that boosts convenience; and
• Higher conversion rates and order values for merchants.

“Economic pressures, including inflation and stagnant wages, position BNPL as a compelling alternative to high-interest credit cards, empowering consumers to manage cash flow with greater flexibility.”

— Pranati Dave, practice director, Everest Group

At the same time, merchants are adopting BNPL to stay competitive, attract new customers and improve checkout conversions, Dave added.

Innovations in user-friendly platforms and data-driven credit assessments are expanding BNPL access, especially for consumers with limited credit history, she said.

Large banks increasingly view BNPL as an opportunity to address shifting consumer preferences and counter fintech disruption, Dave said. BNPL appeals to younger, digital-first users who value flexibility and transparency — areas where traditional credit cards often fall short.

By integrating BNPL, banks can stay competitive, strengthen merchant relationships and unlock revenue from interest, fees and cross-sold products, she said.

For example, JPMorgan Chase recently added Affirm and Klarna financing to its commerce platform.

The $4.3 trillion bank also offers Chase Pay in 4 service for eligible debit card purchases of $50 to $400.

Klarna also works with:

• $2.9 trillion Barclays;
• $2.5 trillion Bank of America;
• $1.9 trillion Wells Fargo;
• $1.6 trillion Citi.

Regulatory shifts

Increased regulatory scrutiny of major BNPL providers including ecommerce giant PayPal, installment loan issuer Affirm and Klarna has sparked a shift toward more robust compliance, transparency and consumer education in the use of BNPL services, Dave said. These companies are expected to enhance their infrastructures with automation and clearer user experiences to meet evolving oversight while maintaining scale and adaptability, she said, echoing Mjelde’s statements.

PayPal is investing in AI, machine learning, APIs and fraud prevention technology to enhance the consumer experience, a spokesperson told BAN.

“In regard to BNPL regulations, PayPal takes the financial health of our customers very seriously, striving to help by providing payment flexibility and choice at checkout while supporting responsible spending,” the spokesperson said.

Consumers who use PayPal’s BNPL service spend an average of 30% more, momentum the fintech plans to build on this year, according to PayPal.

The Consumer Financial Protection Bureau’s May 22, 2024, interpretive rule, which mandates credit card-like protections for BNPL products, has been a key factor in enhancing consumer trust in it, but has also raised compliance costs. This will potentially accelerate consolidation among BNPL fintechs, said Everest Group’s Dave. Meanwhile, financial institutions stand to benefit from the regulatory clarity, giving them a stronger foothold in the space, she said.

As a result, partnering with banks has become increasingly important for fintechs looking to drive down the costs of technology-forward open banking solutions, the PayPal spokesperson said.

However, the CFPB in a March 26 filing said it plans to rescind the 2024 rule, arguing that BNPL services are too different from credit cards to receive the same scrutiny, indicating some relief for fintechs.

Additionally, the CFPB on April 17 announced it had cut nearly 90% of its staff, with fintech supervision taking the biggest hit, marking another development in the Trump administration’s quest to slash the size of federal agencies.

Scoring BNPL

BNPL loans will begin appearing on credit reports as more providers share data, although they are not included in traditional credit scores, an Experian spokesperson told BAN. But that may change.

“As more pay-over-time providers report account information to Experian, lenders who request Experian credit reports will also be able to see consumers’ pay-over-time history,” they said. “Our goal is to ensure consumer credit scores are not negatively impacted simply based on the consumer’s decision to use a BNPL product over another more traditional form of credit.”

While BNPL users will not be penalized for the service, missed payments will be visible to lenders on the consumer’s Experian credit report as more BNPL providers begin reporting activity to the bureau, the spokesperson said.

Affirm is leading the movement, announcing on March 19 that it would report all activity with its pay-over-time services to Experian beginning April 1.

BNPL reporting may help thin-file borrowers by giving lenders a fuller view of their financial behavior, the Experian spokesperson said. There are no regulatory requirements to report BNPL loans, but broader participation could help address blind spots in credit assessments, the spokesperson added.

“Transparency about this activity is the right thing to do for responsible lending and to ultimately protect consumers,” the spokesperson said.

Experian has created a standardized process to onboard BNPL providers and is working with Affirm to expand data sharing across the industry, according to the spokesperson.

FICO and consumer impact

As with traditional credit, the inclusion of BNPL data may particularly affect consumers with limited credit histories. It could also benefit consumers with past delinquencies by reflecting a more recent pattern of on-time payments, Can Arkali, senior director for scores and predictive analytics at FICO, told BAN.

When a consumer is approved for a BNPL loan, the credit issued automatically activates a digital account for the consumer, according to the Federal Register.

A study by FICO and Affirm found that BNPL loans often involve consumers opening multiple digital accounts in a short time, which differs from traditional credit behavior, Arkali said.

The data analytics provider found that score variations for more than 85% of consumers were modest — within about 10 points — similar to score variations for those with traditional credit account, Arkali said. In fact, most consumers who had taken out five or more Affirm BNPL loans saw either no score change or an improved score, he said.

FICO is developing a method to incorporate BNPL data that preserves the accuracy of credit risk assessments while minimizing negative impact on consumers, Arkali said.

Missed payments on BNPL loans could negatively affect the payment history portion of a FICO score, which accounts for about 35% of the score, Arkali said. Conversely, BNPL accounts showing consistent on-time payments or low credit use may contribute to a higher score, he said.

Since the pandemic, alternate means of establishing credit have become increasingly critical — both for underserved consumers and in the uncertain economy, Anita Chalkley, senior vice president of credit acquisition at digital-first FI Synchrony Financial, recently told BAN.

“More inclusive underwriting strategies also help fuel economic growth by providing consumers the opportunity to build their credit health while unlocking spending that benefits their lives and helps hundreds of thousands of U.S. businesses thrive,” she said.

The $119.5 billion lender works with fintechs such as PayPal, Apple Pay, Autopay and Adobe Commerce to expand financing options, the bank told BAN.

BNPL growth drivers

While tightened regulatory scrutiny promotes data transparency, reduced regulatory scrutiny could ultimately help bring about rapid expansion and innovation in the BNPL sector, particularly as aggressive marketing and social media influence accelerate consumer adoption, said Everest Group’s Dave.

BNPL demand is expected to remain strong in 2025, especially during peak shopping seasons, with lower interest rates and rising consumer adoption, Dave said. Continued growth will depend on innovation, differentiation and sustained consumer trust, she said.

“These powerful dynamics have not only redefined payment preferences but also positioned BNPL as a driving force in the evolution of the U.S. financial landscape,” she said.